sayad (Executive) (204 Points)
17 December 2024Hello
Small trading firm having less then 20lacs turnover annualy .
In balance sheet there is loan and advances in total of 25 lacs to various parties but it could not be recorvered and not the firm is making losses and wish to close in next 2 to 3 years
what if the amount is not recovered can we still show as bad debt and close the firm in next 3 years
please advise appropriate solution
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(5555 Points)
Replied 17 December 2024
Conditions for Writing Off Bad Debts:
2. *Reasonable Certainty*: You must be reasonably certain that the debt is irrecoverable.
3. *Written Off*: The debt must be written off in the books of accounts. .
Procedure for Writing Off Bad Debts:
1. *Pass a Board Resolution*: Pass a board resolution to write off the bad debt.
2. *Make a Provision*: Make a provision for bad debts in the financial statements.
3. *Write Off the Debt*: Write off the debt in the books of accounts. Tax Implications:
1. *No Tax Benefit*: Writing off bad debts does not provide any tax benefit.
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